Cost- efficient promotions

At the same time, sales promotions can cause considerable challenges to tax experts, since familiarity with the detailed rules governing personal income tax is not sufficient to identify the correct tax implications of promotions; knowledge of the act on gambling operations, corporate income tax, VAT, and other related laws is also needed. Furthermore, the proper management of promotions from a taxation point of view is not guaranteed in such a case either, as it is indispensable that proficiency in the statutory provisions is combined with the knowledge of “custom law” and the official and unofficial guidelines and audit practices of the tax authority.

Significant tax savings can be achieved with the careful drafting of the terms and conditions of promotions. For this reason, it is worth paying attention to the designing of such campaigns, as it makes quite a difference if a significant part of the promotion budget is paid directly to various tax accounts of the National Tax and Customs Administration or actually spent on promoting sales.

To whom do we recommend our services?

• To those who organise promotions regularly or occasionally (running sweepstakes, competitions, raffles, offering sample products or tastings, giving free gifts or rebates with products, etc.)
• To those who operate loyalty programmes based on collecting points, offer gifts for such promotions or redeem points earned in a promotion organised by others
• To those who offer gifts for promotions organised by another company
• To manufacturers offering gifts / prizes to end consumers by way of retailers or to retailers assisting in promotions organised by manufacturers
• To those who organise promotions for non-private customers or give away gifts as incentives
• And to all who are uncertain about the tax implications of the above and similar situations

How can we help?

• We participate in the planning process, cooperate with your marketing and financial departments in the interest of optimising the tax burdens.
• We assist in identifying the tax implications of promotions already announced or conducted (personal income tax, corporate income tax, value-added tax, other tax and fee liabilities).
• Relying on the EU’s VAT Directive and the decisions of the European Court of Justice, we optimise the VAT management of your promotions and, if necessary, request supporting documents from the Ministry of Finance by way of conditional tax assessment or position letters.
• We support your company in the compilation of the comprehensive system of documentation that may be presented in the course of a tax audit.
• We review the management of your promotions organised earlier, assess the related risks, and make recommendations for the settlement of any differences.
• We provide guidelines with respect to what criteria you should take into consideration in the organisation of a promotion, relying on our experiences gained in the course of tax audits.
• We provide assistance in the case of promotions jointly organised / conducted with the participation of several companies in the preparation of the contractual background, or review the contracts already in place from a taxation point of view, and make recommendations on how the tax implications can be optimised with the proper configuration of the contractual background.

If you have any questions in connection with our services, please contact our advisor colleagues.